Building the Dream Team

Mike: Welcome back to the flipnerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Joe: Hi, I’m Joe Calloway with www.reinvestorprofessor.com and RE360 Real Estate. We’re on the REI classroom, and we’re talking about building your dream team. How to build a successful company person by person.
Mike: This show was sponsored by www.passiverental.com.
Joe: Real estate investing when you’re flipping or doing the residential or small multifamily houses, in some cases, is a lone wolf operation. You see a lot of people, one person, one pick-up truck doing deals which is amazing. But my company who was recently selected as one of Inc. 5000’s fastest growing privately held companies in America, we didn’t get there by one person. Not by me, but a team of people who really took RE360 to the next level. But it wasn’t always this way. I used to be one guy in a pick-up truck. So everyone says, “Well, who is your first hire? How did you know when you needed them?”
Well, I started out on my own, and I started building a construction company, so I hired a guy who was kind of my assistant. Not only did he help me hang drywall and fix roofs, but he would also take a leasing appointment as I needed, or run something across town for me. So this person was a contractor, but they were also a helper in growing my business. As we continued to grow and our portfolio built, we needed to focus on our money, and I was a horrible money manager. Accounting is not what I do well.
There was a bag of money that I carried around, and it took me days to get to the bank. I quickly realized I’m not an accountant. So my next hire was an accountant, but when I say “hire”, you don’t always have to actually hire them as an employee. My first account was subbed out. I paid them an hourly rate to get so much work done, and then also I gave them my tax work and other things at the end of the year. So this person wasn’t an employee, but I still could . . . I still had them as part of my team.
The next hire was actually a full time accountant. Once we got to a point where I needed someone in-house, I not only hired an accountant, but I hired an accountant with a skill set. Don’t just hire one profession when you’re trying to hire. You’ll find some great accountants out there, but the accountant that I found actually loved real estate, was willing to go on job sites and help manage, was willing to go knock on doors and collect rent. So, I hired someone who is a professional, but also someone who has other skills as they can complement me as a lone wolf investor. This person became my right hand and is now a partner in my company.
Our next hires were the sales team. We needed people to lease our properties and get the job done in property management. This person was a young, hustler. They were in their early 20s, they wanted to the grind all day and all night, and they were heavily incentivized by commission work. And this was key very early on, because we didn’t have a ton of cash flow that we wanted it to pay in big salaries. So we offered low salary, high commission. And that person lit it on fire. I ended up paying them more than I would have had to pay them if I did put them salaried, but it ended up working out, because he increased my revenue, and he made my portfolio stronger by increasing rents. That was a key hire.
The next person that I hired is an administrator. At some point, you have to understand as a small business you have to file the paperwork, take out the garbage, and do all these things that are necessary for entrepreneurs to succeed. But at some point it doesn’t make sense for you to be taking out the garbage and answering the phone all the time. Your value has exceeded that.
So then I hired an administrator who could handle everything from my schedule, I’m very disorganized. It’s a bad idea to rely on me to be somewhere on time, but now I have someone who calls me and says, “Joe, you’re going to be late.” “Joe, where are you?” And then they also take care of when I come and lose my keys, or I need to file paperwork, I need to make an important call back on a deal that I don’t want to lose. So that administrative piece isn’t just a person who files paper work, but almost like a personal assistant that really brought the team together.
Now, as we’re a much larger company, we have about 35 people on staff including a full service construction company, we have accountants, we have a whole team of leasing professionals, we have admins, we have a CFO, my next hire once we got to this point was another executive. My CFO, who was my original accountant, and myself were doing a ton of different things, but I needed another high level business thinker. At this point you have to dish out the dough. They are big money to buy, a good executive, but I knew someone who I went to school with back in the day when I got my MBA, and I took him from another company and brought him on board to help manage the high level tasks as an executive.
So, at some point, you can no longer do the low salary, high commission structure. You have to throw down the big money to get the big talent, but it’s well worth it because as you grow, money’s flying out the windows by mismanagement. So make sure you make your hires when you need them. Don’t pinch pennies, or don’t trip over dollar bills to pick up pennies. What I mean by that is make sure you’re spending money so you don’t lose money by having the right people manage your business. Thanks for joining again, and I’ll see you next time.
Mike: Passiverental.com is your source for turn-key, done-for-you, rental properties. If you’d like to be an investor and not a landlord, please visit www.passiverental.com to learn how to purchase cash flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today, and get started by visiting www.passiverental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of www.flipnerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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